Stocks climbing to 10 times their original price are rare breeds -- but they're not impossible to find. Especially when you have Fools for friends.
The market's best stocks include companies that have risen dozens of times in value over the past decade. These aren't penny stocks; they're viable companies with sound business prospects, achieving phenomenal returns every year. Finding just one or two of these monstrously successful companies can help you establish a winning portfolio.
Stalking the monster
To try to find tomorrow's winners, we've enlisted the help of more than 135,000 monster trackers at Motley Fool CAPS. We've compiled a list of the most successful CAPS members, dubbed All-Stars, whose picks have doubled, tripled, or even quadrupled in price. Then we've plucked out some of their recent picks for stocks they find equally promising.
Of course, this is not a list of stocks to buy -- or, for those monster stocks that our CAPS All-Stars have already found -- to sell. Just consider them starting points for your own further research of extreme buying opportunities.
In search of Bigfoot
For Macau gambling giant Melco Crown Entertainment to become a monster, a lot will depend on whether its new City of Dreams casino becomes a nightmare. When it began building the complex, it was the height of the gaming boom in China. Macau, the only place where it's legal to place bets in the tightly regulated country, was a mecca for gamblers. But the disintegrating economy and tighter visa restrictions have led to big challenges for a number of casino operators there.
Gross gambling revenues in Macau fell 13% in the first quarter to $3.8 billion, compared with the first quarter a year ago. Las Vegas' revenues were down 17% in comparison, highlighting the troubles of MGM Mirage (NYSE: MGM) and Las Vegas Sands (NYSE: LVS).
Reflecting that reality, Melco has reduced its ambitious plans for City of Dreams, cutting initial employment estimates by 30% and the number of rooms catering to its VIP clientele by 40%. Unlike Las Vegas, though, hotel rooms tend to not be profitable for casino operators in Macau because of the gamblers' relatively short stays and the amount of freebies for VIPs. The location of the City of Dreams on the Cotai strip -- instead of in downtown Macau, where most of the casinos are built -- also represents something of a wild card.
That's reminiscent of the risk Harrah's faced when it opened its casino in Atlantic City, N.J., in 1980. It put the gambling hall on the city's bay rather than along the boardwalk. But Harrah's Marina (later renamed Harrah's Atlantic City) became the most profitable casino within a year of its opening, outstripping the earnings of any of the other 11 casinos operating there at the time.
So-called "sin stocks" are usually a good bet in a recession, and CAPS member mountain81 believes that's still true. This member believes the economy is recovering, so things will pick up for City of Dreams and the company.
Forget the balance sheet for now. Debt is high but that pays for the new casino, City of Dreams, open(ed?) June 1. Two of the owners are among their biggest debtors. Any improvement in the economy will improve the balance sheet.
If the economy is truly on the way back (I believe so) the influx of visitors will increase along with it. Macau has easy access to 1/3 of the world's population and a big chunk of them are heading to Macau instead of stagnant Las Vegas.
Only two choices, either this will become the biggest sin investment in the world, or they will bankrupt. I'm betting on sin.
A chance for scary growth
It takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions, so start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. And while you're there, weigh in with your own thoughts on whether you think these are tomorrow's monster stocks.
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